Can Obama pull off these fiscal moves this year? Opinions are a mixed bag, but the quick answer is probably not.

From the link:

Tax experts and economists offered mixed reviews about the feasibility of the Obama administration’s attempt to pass additional tax cuts now with the legislative year winding down, even as the president declined Sept. 3 to specify what proposals his administration will advance.

On Aug. 30, the president announced that he will propose a series of targeted tax cuts and infrastructure investments in the coming days and weeks, some of which will be new.

“I will be addressing a broader package of ideas next week,” the president told reporters at the White House Sept. 3. “We are confident that we are moving in the right direction, but we want to keep this recovery moving stronger and accelerate the job growth that’s needed so desperately all across the country.”

Guess what? The federal government will make money on bailing out the banks.

According to new numbers issued today by the non-partisan Congressional Budget Office, a key part of the much-loathed Troubled Asset Relief Program, or TARP, has become a profit center for the U.S. government.

The CBO projects the government will ultimately make a profit of $7 billion from assisting the banks: $3 billion from the Capital Purchase Program, in which the government propped up banks by purchasing preferred stock; $2 billion from helping Citigroup (C, Fortune 500); and another $2 billion from helping Bank of America (BAC, Fortune 500).

In other words, the banks are on track not only to pay taxpayers back all the $200 billion plus we’ve lent them, but put a dent — albeit a small one — in our enormous budget deficits.

I blogged against the massive bank bailout and basically threw up my hands by the time ARRAS came around. I’m happy to report I was completely wrong at the time. TARP and subsequent stimulus may not have been the best possible solution (there’s no way to know, find out or even guess), but it’s not a failure and could even be provisionally considered a success. Reducing the budget by a penny would be a success for the program in my book.

The government recently announced that the Troubled Asset Relief Program (TARP), established at the height of the financial crisis last year to recapitalize the nation’s banking system, will cost $200 billion less than expected. Obama wants that money redeployed into additional stimulus initiatives: “This gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street,” Obama said Tuesday.

Getting Main Street hiring again is key to job recovery: Small businesses have created 65% of new jobs in the past 15 years, according to government estimates. Obama’s latest set of proposals includes several brand-new measures, as well as extensions of existing stimulus acts.

President Obama will visit a Maryland business on Wednesday afternoon to announce initiatives to encourage lending to small businesses. According to an administration official, the proposal will increase the caps for existing Small Business Administration loans and give smaller banks better access to funds from the Troubled Assets Relief Program.

An industry official involved in S.B.A. lending said the White House would propose raising the cap on the agency’s flagship 7(a) loan from $2 million to $5 million. But other programs are likely to see increases, too, including the 504 program.

Expansion to the tune of almost doubling the credit to $15,000 and allowing people other than first-time home buyers into the program. Now that’s some Main Street stimulus, but like “Cash for Clunkers” it’s geared to help one group of industries. Home building and finance in the latest case, automotive in the first case.

From the link:

Congress is considering proposals to greatly expand a soon-to-expire $8,000 tax credit for first-time homebuyers — potentially applying it to all but the wealthiest homebuyers.

Supporters say doing so would further boost home sales, stabilize housing prices and generate jobs. Opponents say extending and expanding the credit would be a waste of moneyand only temporarily stave off further price declines.

The credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30.

Beyond extending that deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And some want to increase the amount of the credit from $8,000 to $15,000.

Currently the first-time home buyer credit is available in full to those buying their primary residence who make $75,000 or less ($150,000 for joint filers). A partial credit is available to those making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers).

The White House is weighing whether to support extending the expiring new homebuyer tax credit and COBRA insurance benefits as part of its review of ways to help the U.S. economy. Gibbs, at a White House press briefing on October 5, took pains not to label these measures as part of a second stimulus package, although he noted that the president’s key economic advisors continue to look at additional options to spur job growth.

Obama, in his weekly address on October 3, said he is working closely with his economic team “to explore additional options to promote job creation.” He repeated his promise to take whatever measures are possible to help job seekers find employment, to open capital and credit markets to businesses and to keep homeowners from losing their homes.

Gibbs said that the White House is working with Congress over legislation to extend unemployment insurance. The House passed the Unemployment Compensation Extension Bill of 2009 (HR 3548) in September and sent it to the Senate on September 22 (TAXDAY, 2009/09/24, C.3). Gibbs said he believes the Senate should be able to act on the bill without further delay, even while health care reform deliberations are in the spotlight. “I think the Senate can do both, and a lot more,” Gibbs stated.

Hypocrisy doesn’t look all that great, and it probably won’t play all that great. Trust in this gang is very, very low among small government GOPers and libertarians alike.

From the link:

“Small Government Returns as [Republican] Maxim,” headlines the Washington Post.

The unanimous vote by House Republicans against President Obama’s stimulus plan provided an early indication that the GOP hopes to regain power by becoming the champion of small government, a reputation many felt slipped away during the high-spending Bush years.

But small-government voters may not be persuaded that the GOP has returned to its principles on the basis of one vote against a bill proposed by the other party, which happens to be, in the words of Republican whip Eric Cantor, likely “the largest spending bill in history.”

The New America Foundation has an interesting position paper out on utilizing some of the infrastructure stimulus spending. Interesting and at first glance looks like a great idea for a number of reasons.

This is from an email sent by the think tank:

Last Friday the New America Foundation hosted a debate on proposals to spur investment in broadband in the upcoming economic stimulus bill. There were clear differences on how best to encourage investment and the merits of placing conditions on federal subsidies, which you can view at the video highlights below.

New America also released a paper by Benjamin Lennett and Sascha Meinrath, focusing on a long-term approach to broadband investment. Building a 21st Century Broadband Superhighway seeks to leverage federal spending on traditional infrastructure (road, bridges and possibly railways) to create a fully interconnected, public access fiber infrastructure to bring high-speed connectivity to nearly every community.

The hundreds of billions that will be spent over the next few years to rebuild the nation’s crumbling transportation infrastructure provide a unique opportunity for the U.S. to extend critical middle-mile fiber connections, at an incremental cost to taxpayers. The Federal Highway Administration estimates that 90 percent of the cost deploying fiber in public rights of way along roadways is associated with digging up and repairing the road to install the buried fiber. Thus, the U.S. has a tremendous opportunity to leverage the construction, repairing, and upgrading of the nation’s infrastructure that will already occur to deploy fiber at a fraction of the cost of typical deployments.

The paper calls for the federal government to fund and mandate the installation of conduit and high-capacity, dark fiber bundles along all federally-subsidized and direct federal highway projects. The approach offers a cost-effective and sustainable means to build the middle-mile wholesale fiber links necessary to facilitate high-speed broadband deployment by all providers; creating a foundation for universal and affordable broadband access, improving competition, increasing speeds and lowering prices.

The Interstate Highway System and broader National Highway System serve as the backbone of transportation and commerce in the United States. A 21st Century Broadband Superhighway would serve as the backbone for communication and commerce in the 21st century. Given the nation’s current woeful standing in terms of broadband adoption, availability, speeds, and prices compared to other developed nations, a dramatic intervention is necessary to maintain U.S. technological and economic competitiveness.

It was federal leadership and funding that helped build ARPANET and NSFNET, the research networks that served as the foundation for the Internet. Once again, it will take a national effort to regain our technological standing. The U.S. needs a sustained broadband build-out effort that brings the necessary infrastructure to communities across the country and provides the speeds and capacity to meet, not just the communication needs of today, but the demands of tomorrow. Mandating and funding the deployment of high-speed, open access fiber bundles along all Federal-aid highway and direct Federal highway projects offers a cost-effective and sustainable means to achieve these goals, bringing high-speed connectivity to nearly every community and providing the foundation for universal, affordable access to high-speed broadband.

Aides to President-elect Obama have agreed to drop an unpopular idea to provide a $3,000 tax credit for companies hiring new workers from the economic stimulus package, setting up a new round of lobbying for tax cuts that could replace it, lawmakers said Jan. 13.

“Every member has five ideas” for how to replace the jobs creation tax credit, Senate Finance Committee Chairman Max Baucus (D-Mont.) told reporters after a meeting with Obama aides. Baucus did not elaborate on possibilities for replacing the credit, but other Finance Committee members floated suggestions for further expansions of renewable energy tax credits and a tax credit of up to $4,000 to help middle-class households pay for college.

The tax elements of the package have been expected to cost about $300 billion over two years, and the total package is projected to be at least $775 billion.

Sen. Charles Schumer (D-N.Y.) told reporters he is pushing to convert to a tax credit the deduction of up to $4,000 that is currently allowed for higher education expenses under the tax code, to provide assistance to individuals earning too much to get help from Pell grants but too little to afford tuition. The provision would cost an estimated $3 billion to $4 billion per year, Schumer said.

Committee members rejected the jobs creation tax credit amid concerns that it would be impossible to implement fairly and may not be stimulative since it would merely treat the symptoms of the economic slowdown, rather than its cause.

House Speaker Nancy Pelosi said Wednesday that Democrats are close to finalizing the details of an economic recovery package.

Pelosi declined to give reporters any details of the bill, but said she is more confident that Congress would reach the mid-February deadline for getting a bill to Obama’s desk.

“It’s about four words — jobs, jobs, jobs, jobs,” she said.

The overall price tag for the package is $800 billion to $850 billion, with $300 billion to $325 billion designated for tax cuts and $500 billion to $525 billion dedicated to infrastructure spending and aid to the states, according to a senior House Democratic aide.

It’s possible an announcement will be made on Thursday, the aide said.

Eager to jolt a worsening economy back to life, President-elect Barack Obama’s aides are assembling a two-year stimulus package that could cost $850 billion with a blend of new jobs, middle-class tax relief and expanded aid for the poor and the unemployed.

Obama has not settled on a grand total, and the final figure could be smaller. But after consulting with outside economists of all political stripes, his advisers have begun telling Congress the stimulus should be bigger than the $600 billion initially envisioned, congressional officials said Wednesday.

Obama is promoting a recovery plan that would feature spending on roads and other infrastructure projects, energy-efficient government buildings, new and renovated schools and environmentally friendly technologies.

December 15, 2008

Yes, you read that correctly — more than one trillion dollars over the next two years. We’ll what it really entails, but I do admit he has a strong economic team in place. I’ve also read his team is, to put it nicely, freaking out now that they are receiving briefings from the inside.

Liked I’ve blogged before, it’s pretty much a given that nothing is going to get substantially better before May or June at the earliest.

From the link:

President-elect Barack Obama‘s team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday.

Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years “a very low-end estimate,” the newspaper said, citing an unidentified person familiar with the matter.

The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy.

Officials with Obama’s camp have declined to comment on media reports about the size of the boost his administration might seek to give the economy through increased public spending and tax cuts.

Obama is due to take office on January 20.

Battered stock market investorsaround the world have taken heart from previous indications of how Obama’s administration may seek to kickstart growth in the world’s largest economy.

Obama has promised he will launch a massive public works program to help lift the U.S. economy out of recession.